Shutdown, slowdown, balance lead to decline in home sales

California realty officials attribute a decline in home sales in October to the government shutdown, a typical seasonal slowdown and the market moving into a more balanced direction.

Statewide home sales declined for the third straight month last month, although sales of condominiums and townhomes continued to be strong, according to the California Association of Realtors.

"As anticipated, the housing market was disrupted by the closure of the federal government in October, which prolonged the loan approval process and led to the delay of many home closings, especially on FHA transactions," explained Kevin Brown, the 2014 state group president.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 401,170 units in October, according to information collected by from more than 90 local associations and MLSs statewide. Sales in October were down 2.7 percent from September and down 11.1 percent from October 2012.

The statewide median price of an existing, single-family detached home was down 0.3 percent from September's median price of $428,740 to $427,290 in October. October's price was 25.3 percent higher than the revised $340,910 recorded in October 2012, marking the 16th straight month of double-digit annual gains, according to the report.

Advertisement

"The recent jump in interest rates, coupled with the run-up in home prices since the beginning of this year, lowered housing affordability. As such, many buyers are considering more affordable options such as condos and townhomes, especially in the San Francisco Bay Area, where there is a greater abundance of these property types," said state group vice president and chief economist Leslie Appleton-Young. "As we enter the slower home buying season, we expect home prices to be capped by seasonal factors and annual price gains to continue to taper off in the coming months."

Appleton-Young was in the Bay Area last month and told members of the Silicon Valley Association of Realtors that the Bay Area has the strongest economy in the state and its recovery has been unparalleled.

While the $679,640 median home price of an existing single-family home in the Bay Area slipped 1.1 percent from that of the previous month, the median was 14.6 percent higher than the $593,080 median in October 2012.

"Some buyers might have experienced some degree of economic uncertainty as a result of the government shutdown, but it appears we are returning to a more balanced market, where prices are more sustainable. Demand for homes in the region is still very strong," said Carolyn Miller, president of the Silicon Valley association.

October sales of single-family homes in the nine-county Bay Area were up 13.4 percent from the previous month and 0.1 percent higher year-to-year. Santa Clara County saw a 2.3 percent month-to-month increase in single-family home sales in October, though sales were down 4.8 percent year-to-year.

The median price of a single-family home in Santa Clara County was $770,000, up 11.9 percent from $688,000 in October 2012. The median number of days it took to sell a single-family home in Santa Clara County in October was 21.4 days, compared to 20.1 days in September and 21.6 days in October last year.

According to the state group's Unsold Inventory Index, among the nine counties in the Bay Area, both Santa Clara and San Mateo counties reflected the lowest inventory supply in October, just 1.9 and 1.8 months, respectively. The index indicates the number of months needed to sell the supply of homes on the market at the current sales rate. A six- to seven-month supply is considered typical in a normal market.